How To Smoothly Transition from Two Incomes to One (Without Losing Your Money or Your Mind)
Everything we do for our spaces–the projects, the improvements, the dinners we cook and the parties we throw–it’s all fueled by the money we make. But we fully believe that you don’t need a ton of money to live well, so when the time comes that you and your significant other decide to scale down to one income for some reason or another, rest assured that you can do so without losing your minds or your money.
Take a Trial Run
If you’re lucky, dropping one income won’t be unexpected, and you’ll have a bit of time to prep and plan for your new financial future. As a practice run, dedicate a few months to live off of just one income while both paychecks are still coming in. Don’t worry if you go over budget at the beginning; the goal is to see where the potential problems lie while you still have the cushion of the second income.
Save Away Some Money
If you’re testing out the trial run above, sock away all that extra money into your emergency fund. Once you’re living with one stream of income, it’s critical that your emergency fund has enough cash in it to cover your family’s expenses for 3-6 months, at least.
Adjust Your Household Budget
Yes, you’ll need to adjust your budget to account for less money coming in, but there’s good news! If your transition is based on a lifestyle change, you might also find that you’ll be spending less post-income drop. For instance, if one of you is staying home to take care of the kids or work on a pet project, expenses like gas money and after-work happy hours will all but disappear. These adjustments probably won’t get you back in the black, but you’ll have a more accurate picture of what your post-income money life looks like.
Learn to Spend Less
There are two ways to increase your wealth: Earn more or spend less. Since the former is in a holding pattern these days, you should get on board with finding new ways to save money. Bundle your bills. Cut the cable cord. Do-it-Yourself and buy secondhand. There are plenty of ways to save money that don’t feel like you’re doing without. And, because we know you take pride in your space, know that you can still decorate on a budget.
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What’s your best advice for sizing down your household income?